Trucking Companies Lost Income Feb 2017

Trucking companies lose significant income in three main areas related to the management of load weights. These costs often go unnoticed simply because it‘s the method of operation that has become common practice. It’s just the way it is. However, it doesn’t have to be that way.

 

 

There are hundreds of millions of dollars lost by truckers because loads are not optimized in terms of maximum load weight. The risk of hauling overweight, and the significant costs associated with that, causes shipment after shipment to hit the road under maximum capacity.

 

Whether a shipper is paid by weight, by volume, by trip, or by quantity, when full capacity is not achieved with each load, it is simply revenue that vanishes.

 

Long haulers may not have the full load they could have on board and that means lost revenue. LTL (Less Than Load) operators may not take on that last skid at their last stop for fear of going overweight. Sand and gravel trucks may not carry maximum weight to and from the pit to their site destination which creates significant lost revenue in the long run. Waste trucks that are paid by weight lose revenue by not topping up before heading to empty their load. They may be able to execute extra revenue producing loads in a day if they could continue to load up with confidence.

 

 

As a simple math example, if a vehicle can generate $200,000 in revenue in a year and the common experience is to ship 4% underweight as a precautionary measure then the loss is a linear calculation. This common practice is costing $8,000 annually for every truck in the fleet in this example – every year, and many examples are much higher in terms of lost revenue per vehicle.

 

The first risk of hitting the road with too much weight on board is the risk of incurring the direct cost of fines at government scales for doing so.

 

However, there are many costly risks of this practice besides the direct cost of fines. If a company is fined consistently, it can cause insurance rates to increase, or worse, it could cause denial of insurance.

 

In addition, a vehicle could get pulled off the road if
it’s overweight and that can cause significant costs to send expensive assets, both in operating costs and time, to the weigh station yard to off-load weight so the trip can be completed, assuming there isn’t a more long- term penalty.

 

There are also significant liability risks if an overweight load is involved in any type of accident. No trucking company wants to face that circumstance.

 

 

 

Whether third-party scales are used or in-yard scales are used there are significant costs with the weighing process for truckers.

 

If it’s a third-party scale there are the fees per load that must be paid.

 

If it’s an in-yard scale, then there is the cost of the unit itself plus maintenance. There may also be an employee’s time used to operate the scale, or the truckers themselves have to spend additional time operating the scale. There are certainly costs involved with this process that are often overlooked because the scale itself is thought of as a sunk cost.

 

Perhaps more important, is the time lost going to scale. This cost is multiplied if the load weight must be adjusted, up or down, and then weighed again before hitting the road.

 

If the sand or gravel truck can do one more load per day because they don’t have to go to scale, that can be a huge increase in revenue over a year. If extra time can be saved, perhaps extra revenue-generating miles can be achieved for short and long haulers. If LTL shippers can eliminate the trips to scale at various locales along their route, then revenues will surely increase. As mentioned above, if the Waste or Recycle vehicle can make one less trip to the dump they can clear more volume from the streets resulting in more revenue at less cost.

 

 

On-board weighing solutions using SIM card technology and the existing cell tower networks throughout 
the United States and Canada can deliver real-time, instantaneous weight solutions to the truck cab, as well as to the office of the trucking company. Loads can

be optimized with confidence for revenue purposes. Overweight costs and risks can be avoided with data that is accurate to within 150 pounds. Scale costs and the associated losses associated with time spent in the weighing process can be completely mitigated.

 

 

If pilferage is an issue with any trucking company, the reporting capabilities of this type of solution can also identify when and where loads weights were adjusted when not authorized.

 

 

Technology is upon us. Companies using these solutions will certainly have a competitive advantage over those that don’t bother. The payback for implementing an inexpensive on-board, real time, weighing solution is almost immediate for many trucking operations just like the costs and lost revenues are immediate as well.

 

For more information and to learn how to maximize profit, please contact:

 

Travis McElroy - Business Optimization Specialist, Schooley Mitchell www.schooleymitchell.com/tmcelroy

travis.mcelroy@schooleymitchell.com 

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